A better emissions solution than a revenue-neutral carbon tax

A better emissions solution than a revenue-neutral carbon tax

BRAD WALL

Special to The Globe and Mail

Published Friday, Oct. 14, 2016 5:00AM EDT

Last updated Thursday, Oct. 13, 2016 3:25PM EDT

Brad Wall is Premier of Saskatchewan.

The climate-change solution proposed by the federal government, and warmly endorsed by a Globe and Mail editorial last week, is both simple and seductive: A carbon tax is applied. Money is collected, money goes out. Greenhouse gas (GHG) emissions go down.

The problem is that there is little evidence this works, and yet it risks jobs and competitiveness in carbon-intense sectors such as energy, manufacturing, mining and agriculture. In British Columbia, often touted as the example of carbon-tax efficacy, emissions have increased since 2010.

As for our position on the imposition of a federal carbon tax, consider that Saskatchewan has a disproportionate share of Canada’s trade-exposed industrial sectors. Further, a significant portion of Saskatchewan’s GHG emissions relate directly to getting our products to the world market. Federal climate-change targets therefore hit us harder. Our geographically dispersed population also creates additional challenges.

The federal government does not appreciate the simple reality that a revenue-neutral carbon tax is not sector-neutral. Carbon-intensive, export-sensitive industries such as agriculture and energy, the backbone of Western Canada’s economy, will be hit the hardest.

Take the example of Saskatchewan’s lentil producers, who produce a crop that fixes nitrogen in the soil and helps lower GHG emissions. Growing more lentils in Saskatchewan would actually help mitigate climate change. But customers in India will soon have a choice between buying Saskatchewan lentils at a higher cost with a carbon tax built in, or buying from lower-cost suppliers. Given India’s circumstances, they will take the lower price and Saskatchewan’s lentil producers will suffer.

Consider Saskatchewan’s potash producers. Their global competitors are Russia and Belarus, two countries unlikely to impose a carbon price. The world’s potash market is driven almost exclusively by price, which is currently low. When potash customers move to lower-cost alternatives, Saskatchewan will suffer. Prime Minister Justin Trudeau’s assurance of revenue neutrality will offer little comfort to laid-off potash miners in Esterhazy and Lanigan.

Let’s turn to the oil-and-gas sector. In the coming months, energy producers will be hit by both new carbon taxes and significant new methane regulations, which are the result of another unilateral decision made by Mr. Trudeau without provincial input. Meanwhile, methane regulations in the United States will be imposed more gradually, given political uncertainty and pending litigation in that country. This puts Saskatchewan at a competitive disadvantage. In a global market, companies produce oil and gas where they can make the most money. The rigs will move from Estevan, Sask., to Bismarck, N.D., overnight. That’s not revenue-neutral or job-neutral for Saskatchewan.

Some may say it’s worth it to risk these important sectors of the economy and the jobs they provide if a carbon tax reduces emissions.

Yet the Globe itself has taken note of a federal report predicting that greenhouse gas emissions in British Columbia will rise 32 per cent between 2013 and 2030, even with a carbon tax in place.

In Saskatchewan, we are opposed to a carbon tax whose efficacy is at best doubtful and whose impact on trade-exposed industries that provide thousands of jobs will be harmful.

We think a better approach is to develop and deploy technology capable of cleaning up emissions from the 2,400 new coal-fired power plants being planned or constructed around the world.